onyx1

Easy now Parsad. There is no indication that this was anything but an innocent mistake (one that has been happening since Obama got into the race in 2007). What's more, it wasn't just Fox, but also a reporter from a network well know for supporting Obama, MSNBC. http://dailycaller.com/2011/05/02/typo-msnbc-correspondent-accidentally-reports-on-twitter-that-obama-killed/

Buffett sees MSFT as a value play at current levels.... http://uk.finance.yahoo.com/news/Buffett-says-held-back-good-reuters_molt-973332293.html?x=0&.v=1 Whew...glad I added more on Friday's pull back.

I am very constructive based on the underlying fundmentals, but its a large, large cap and it may well be a slow grind to higher levels. I'm long the 17.5 Jan 2013 calls (they just traded .27 over intrinsic value so they are not expensive at all relative to the underlying). I have also been selling 1-3 point otm calls every two months aginst the position. So far, its working well.

Look all you want but you won't find me ever saying they weren't over-reserved. What I said was that your evidence was weak.

Well if I knew SUR was underreserved by 21% hell yes I'd give it a huge weight!! :o But unfortunately, that development cannot be projected upon today's reserves (any more than one can project the required addition to 2002 reserves of 14.7% so far). If historical reserve performance is what you are after then the best to way get it is a year-by-year % calculation of development from the prior year. The cumulative nature of the calander year triangle makes this very straightforward and all prior years get incorporated as you move forward in time. This was my favorite Onyx comment in almost my entire time on this board. The conclusion was so completely wrong. Ironically, after Onyx wrote it, in the latest quarter reported for SUR Highlights included: Favorable loss reserve development of $54.3 million in the fourth quarter of 2010 and $76.3 million for the year ended December 31, 2010.A combined ratio of 34.0% in the quarter, 65.3% for the year [largely due to reserve releases!]. I’ll say it again. That the 1999 reserve level turned out to be 21% conservative 10 years later, does not mean that all of today’s reserves 21% conservative too. That is just nonsense. The fact that SUR released reserves last year does not validate your methodology. The 2000 reserve level is now 10 years old and it is re-estimated at 12% conservative. Based on your stated methodology all reserves today are 12% conservative. Laughable! It’s kind of weird to me that you would try to claim such a ‘victory’ over this. I guess an intense need for attention will do that.

Count me out. I am not interested in getting into another one of these circular arguments.

Because the combined ratio is only one of many factors that determine the really important metrics, growth in BV per share and ROE. Here we go again....the combined ratio is the most important factor, along with the portion of the ROA coming from underwriting. Anyone can lever the premium to surplus ratio and look like they're acheiving a nice ROE. It works both ways. Anyone can be overly selective, writing only the most profitable policies, boast of a great CR, but because of underleverage show little in terms of an ROE.

Because the combined ratio is only one of many factors that determine the really important metrics, growth in BV per share and ROE.

If you have an interest in the P&C market, you can’t find a better source of information on market dynamics & pricing trends than the quarterly conference calls of WRB (CEO is W.R Berkley). Personally, I learn something new every call. Here is a summary of today’s call: * There is visible momentum in higher pricing. * In aggregate, renewal prices are up 1%. This is the first time in 17 quarters they have seen pricing improvement across the product spectrum. Leading the pricing improvement is Workers Comp where he sees rates up 5%. (Note: His observation on pricing is consistent with my discussion with Zenith officials at the FFH annual meeting, and Seabright (SBX) press release today where they said they achieved “meaningful price increases”) * He expects that by the end of this calendar year, aggregate pricing will be 5%-8% higher YOY. * WRB’s assigned risk is up substantially due to standard carriers pulling back from riskier policies (he believes this a signal of a hardening market). * RMS version 11 (a CAT loss model used by many in the industry to forecast loss exposure to natural disasters) has just been released and is very conservative relative to older versions. The result is a likely increase required reserves for those who have cat risk. This will have a big impact on regionals with concentrated exposures. He expects the rating agencies will adopt this model and put pressure on companies to add reserves. Rate increases will likely follow. * Note: Rating agencies have already taken rating actions due to the results of the new model. http://www.insurancejournal.com/news/national/2011/04/18/194986.htm * At the end of the last soft market many in the industry asserted that they were properly reserved and were wrong. He believes the same will hold true today. * He reminded listeners that the transition to a hard market is a slow process. The first sign of the last hard market 2002-2007 occurred in 1999 with long-haul trucking pricing. We may be seeing the same with today’s WC rates.

The rebalancing is gravy on top of a fundamentally cheap stock. How often do you find a company whose products command 80% gross margins and are ingrained into the computing habits of users in every country of the world, priced at an 11% FCF/EV yield and growing 10% annually? With no net debt on the balance sheet and annually buying back 3% of outstanding shares while paying 2.75% in dividend? The rebalancing may not be the only once in a generation opportunity here. Good call Twacowfca.

In the spirit of getting this started I will match, up to $1000, any donations pledged on this thread. Thanks Parsad for accepting donations to such a worthy cause!!

http://www.cbsnews.com/video/watch/?id=7360204n A two-minute video that could change your life. Enjoy!

If you are young and ambitious, it doesn't really matter that much. Be loyal, patient, and make yourself indispensible those around you, especially your boss. Befriend and help anyone who works in an area where you have an interest. If you are competent and effective you will be "discovered" and given new opportunities.

...from local with first hand knowledge. http://www.kalzumeus.com/2011/03/13/some-perspective-on-the-japan-earthquake/

Amazing before and after pictures: http://www.abc.net.au/news/events/japan-quake-2011/beforeafter.htm

I like Tilson generally, but his explanation here falls short. How can $109mm in AR offset buy $26mm in net debt produce a goose egg for shareholders? Look into the details and you will find that the $109mm has a $42mm accrued compensation liability attached to it, and then there is $25mm in preferred stock ahead of common. Include GW and intangibles and you will see TBV was, at best, only $0.90 per share at 9/30/2010 and they bought as high as $1.88 (times 38mm shares is $71mm market cap, not $40mm) in December 2010. And this is for a company bleeding cash. I don't see how he can come anywhere close to calling this an investment with 'reasonable margin of safety'. I'm not critical of his making a mistake here, I just don't like the way he portrays the thesis to his investors.

I wonder whether other members who work for oneself full time have to fight this stereotype or not. What will you suggest me do? For me, a healthy byproduct of not working for anyone else is that I no longer care much about how others view me. Aside from free time, this ranks as one of the best parts of attaining the retirement goal. When you reach true independence, you will probably feel much of the same. Hope you get to you goal soon.

Would like to thank many board memebers to share on this topic. I have a question that I would like to ask: At what point, should one quit the "corporate" job and just "manage one's (one's family's) investment?" What criterion should we use to decide on this? I have been wondering about this question and would appreciate any insight on this question. I stopped working for other people when I had enough assets that I could afford to live a chosen lifestyle on less than 2% annually of my net worth. The lifestyle part of the decision is as important as the net worth goal since it is levered 50:1. If you require a modest lifestyle, the ultimate luxury of unlimited free time may not be all that far away!

A wise man once said: "Sure of their qualities and demanding praise, more go to ruined fortunes than are raised."

Well if I knew SUR was underreserved by 21% hell yes I'd give it a huge weight!! :o But unfortunately, that development cannot be projected upon today's reserves (any more than one can project the required addition to 2002 reserves of 14.7% so far). If historical reserve performance is what you are after then the best to way get it is a year-by-year % calculation of development from the prior year. The cumulative nature of the calander year triangle makes this very straightforward and all prior years get incorporated as you move forward in time. I've been vindicated on SUR in my assertion that they were drastically over-reserved. Look at the latest reserve release. It is truly a wonder to behold. I was right ... I did a rain dance yesterday, and today it rained. Does that prove my ability to cause rain? This quarter’s reserve release doesn’t advance your stated method of predicting reserve releases either. Back up for a second. The reasoning for the assertion of ‘drastically over-reserving’ was that at one moment in 1999 reserves were set, and because 10 years later they turned out to be conservative to the tune of 21%, you assert that SUR systematically maintains reserves above actuarial estimates and is worth more than reported book value. To base an investment decision today primarily on the quality of a single reserve judgment that prior management made 10 years ago is full of potential for nasty surprises. This method isn’t predictive, and I hope no one here follows the advice of those who espouse it.

His argument is that is that the income gap caused people to borrow above their means to keep up with the material gains of others and sooth their resentment of the rich. This resentment was no doubt fueled by the same political class that was offering relief in the form of easy credit. The political class, of course, sought payback in the form of re-election. His answer? Reduce the income gap! If the author fails to include how lack of personal responsibility contributed to the crisis, I cannot take his argument and solution seriously.

Enjoy!

I retired when I was able to live comfortably on less than 2% of my investable assets. :D It all depends on your definition of 'comfortable'?

Very interesting! I have an important question for board members. The (ex)vagabond uses a very simple method for estimating intrinsic value. First, he determines what the no BS tangible BV/SH is. This isn't exactly liquidation value with no worth given to the business, but close. Then, he looks at historical earnings and normalizes them going forward about five years to get annual normalized earnings. Then, he capitalizes these normalized earnings at a conservative rate of, say, ten times. Finally, he adds the capitalized earnings to the tangible BV and presto! there's the IV. My question to board members is this: is this good enough for getting a rough idea of IV? It seems to me that he should assign no value to the BV because he's mixing a DCF method of computing IV with a balance sheet method. (although it still would be nice to have some tangible BV in case the business goes south or to make a more attractive acquisition). I agree it is double counting, unless part of the TBV is not needed to run the business like say excess cash.

The irony of a signed book like that is that those who most appreciate it are the least likely to want to pay up for it!